A former employee reported that members of his Los Angeles branch opened accounts or credit cards for customers without their consent, saying a computer glitch had occurred if customers complained. He also reported that employees lied to customers-saying that certain products could only be purchased together-to hit their numbers. Other tactics to meet sales goals included encouraging customers to open unnecessary multiple checking accounts – one for groceries, one for travel, one for emergencies, and so on – and creating fake email addressees to enroll customers in online banking.

Henrik Kniberg, a management coach who’s worked with LEGO and Spotify, believes that assuming an organization can have either full autonomy or full alignment (where tasks for employees strictly align to the goals and directives of their managers) amounts to a false dichotomy. A bit of each is required, both for starting a business and maintaining it. A leader of a company of one has the role of enabling autonomy while providing alignment-setting processes and making sure there are common goals. Achieving this delicate balance can be challenging.

As he [Ken Iverson] explained in his book, Plain Talk: Lessons from a Business Maverick,

Most of today’s corporations were conceived as command-and-control organizations. The founders of integrated steel mills, for example, clearly assumed that the “genius” of the organization resided almost completely in management … In contrast, we built Nucor under the assumption that most of the “genius” in our organization would be found among the people doing the work. 2 3 From the outset, we shaped our business to let employees show management the way to goals that once seemed unreachable.

The key to Handelsbanken’s unrivaled performance is its highly unorthodox organization model. In 1970, Jan Wallander, an economist 9 working at a regional bank in northern Sweden, was appointed as Handelsbanken’s CEO. At the time, the bank was losing money and was embroiled in a dispute with regulators. As Wallander analyzed the bank’s underperformance, he became convinced that overcentralization was the culprit. The bank’s bloated head office and rigid planning process made it unresponsive to shifts in economic conditions and customer needs. (At the time, loan approvals took two months to complete.) Moreover, senior bankers had made a spate of poor credit decisions that had imperiled the balance sheet.

You’ll notice that the bank’s SG&A expenses (selling, general, and administrative costs) average less than 40 percent of revenue, versus an average of 67 percent for its rivals. This massive efficiency advantage gives Handelsbanken the ability to resolve the high-touch/low-cost paradox. When compared to its competitors, Handelsbanken underinvests in bureaucrats and overinvests in customer service. In so doing, it rejects the black-and-white thinking that is typical of other big banks.